Rosecroft buyers provide for slots, casino at track

Centaur management firm would profit if gambling activities were expanded

October 02, 2003|By Greg Garland | Greg Garland,SUN STAFF

Indiana-based Centaur Inc. has created a separate management company that would reap handsome profits if a slots emporium or a full-scale casino is built at Rosecroft Raceway in Prince George's County, according to records released late yesterday.

The company - Centaur Maryland LLC - would collect a management fee of $1.5 million annually, plus 5 percent of the net cash flow each year and performance bonuses, from "gaming related activities" at Rosecroft other than horse racing, the documents show.

The records the company filed with the Maryland Racing Commission describe "gaming related activities" that could be permitted in the future as "table games such as blackjack, baccarat, roulette, craps, mini-baccarat, pai gow poker [and] coin-operated gaming machines and other casino-type authorized games."

The Sun obtained a copy of the records after requesting them under provisions of Maryland's Public Records Law. Centaur filed the papers in its application for a license to buy Rosecroft, which requires racing commission approval.

Centaur recently teamed with a new partner, Carl D. Jones, a politically connected businessman from Prince George's, to pursue its plans to buy Rosecroft.

Each plans to initially invest $15 million in the partnership and split the proceeds - whether from slot machines or harness racing - until they recoup their money, according to the documents released yesterday.

Jones' company, the Palace at Rosecroft LLC, would own 52 percent of Rosecroft, and Centaur would own 48 percent if the racing commission approves the transaction.

The companies reported that they plan to use their joint $30 million to buy letters of credit - essentially bonds - to guarantee commitments involved in the purchase of Rosecroft.

Centaur has agreed to pay $55 million to acquire the harness track from its current owners, Cloverleaf Enterprises.

The agreement also allows the companies to bring in other partners, if necessary, to finance construction of a slots emporium and other improvements.

Jeffrey M. Smith, Centaur's chief executive, said both companies are sharing the risks of the venture and its rewards.

"We're each putting in our capital equally, so we will share the available cash flow equally until we recoup our initial $30 million," he said.

After that, the profits will be split according to percentage ownership for each group, Smith said.

He said the terms of the deal are the same whether Rosecroft just does harness racing and simulcasting, or if it gets slots.

"The distribution is not dependent upon alternative gaming," Smith said.

The deal does, however, envision that Rosecroft's new owners won't participate in a costly "revenue sharing" agreement negotiated several years ago with thoroughbred tracks.

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